DGAP Vs Vertex Homes Pvt. Ltd. (GSTAT)
The proceedings arose from an application filed by Sh. Abhilash Mohanty alleging that M/s Vertex Homes Pvt. Ltd. had failed to pass on the benefit of Input Tax Credit (ITC) to homebuyers in its “Vertex Panache” project following the introduction of GST from 01.07.2017, thereby contravening Section 171 of the CGST Act, 2017. The Standing Committee on Anti-Profiteering referred the matter to the DGAP, which initially reported profiteering of Rs. 73,00,010/-, comprising a base profiteered amount of Rs. 65,17,866/- and GST of Rs. 7,82,144/-, allegedly required to be passed on to 140 eligible homebuyers.
The Respondent contended that substantial escalation in construction costs had materially offset the additional ITC benefit. The budgeted construction cost was Rs. 1,56,94,91,872/-, whereas actual expenditure amounted to Rs. 1,61,06,72,320/-, resulting in an overall cost increase of Rs. 4,11,80,448/- including indirect cost. The Respondent specifically identified increases of 19.87% in Ready-Mix Concrete (RMC), 62.98% in Sand and 73.17% in Bricks. Based on actual quantities consumed and costs incurred, the additional expenditure attributable to these major inputs was stated to be Rs. 3,49,87,499/-.
The Respondent relied upon the Delhi High Court judgment in Reckitt Benckiser India Pvt. Ltd. v. Union of India, particularly paragraph 118, concerning price increases based on genuine commercial factors despite reduction in tax or availability of ITC. The Respondent also produced a Chartered Accountant’s Certificate dated 25.06.2026 from M/s Tukaram & Co. LLP supporting the additional expenditure.
